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07/21/2021

PrivacyCon 2021 agenda released

The Federal Trade Commission has released the final agenda for its sixth annual PrivacyCon event, which will be held online on July 27 and will include a focus on the privacy and security risks associated with algorithms, online advertising, and the Internet of Things.

PrivacyCon 2021 will highlight exciting new research and build on discussions in the United States and around the globe on trends related to consumer privacy and data security. Commissioner Rebecca Kelly Slaughter and Chief Technologist Erie Meyer will give opening remarks followed by six panels focused on algorithms, privacy considerations and understanding, advertising technology, the Internet of Things, privacy issues related to children and teens, and privacy and the pandemic. The event will also feature a presentation on the Algorithmic Bias Playbook by Ziad Obermeyer, Professor of Health Policy and Management at the Berkeley School of Public Health.

07/15/2021

Fed posts paper on remote authentication methods

The Federal Reserve recently published Remote Authentication Landscape and Authentication Methods, the first of three research briefs planned for this summer.

Many financial institutions, payment service providers, processors and merchants rely on outdated authentication and verification methods to prevent payments fraud. The brief explores authentication strategies to address new account, synthetic identity, and account takeover fraud.

The second brief in the series will describe several remote payment use cases where payments stakeholders apply authentication during the enrollment and transaction process. The third and final brief will discuss payments industry approaches and tools to mitigate remote authentication fraud, as well as key findings and recommendations on next steps to build awareness and engage industry stakeholders.

07/15/2021

FinCEN Exchange on ransomware

FinCEN has announced it will convene a FinCEN Exchange in August 2021 with representatives from financial institutions, other key industry stakeholders, and federal government agencies to discuss ongoing concerns regarding ransomware, as well as efforts by the public and private sectors. The FinCEN Exchange will build upon FinCEN’s November 2020 event on ransomware. FinCEN anticipates that this FinCEN Exchange will assist its government and private sector partners to inform next steps to address ransomware and focus resources to mitigate the threat. This announcement is part of a government-wide effort to combat ransomware.

According to FinCEN, ransomware attacks are a growing concern for the financial sector, given that financial institutions can be targeted by ransomware attacks as well as reputational and financial integrity concerns about the role financial institutions might play in the processing of ransom payments. Efforts to detect and report ransomware payments are vital to prevent and deter ransomware attacks, and to hold these attackers accountable for their crimes. In October 2020, FinCEN issued Advisory FIN-2020-A006 to alert financial institutions to predominant trends, typologies, and potential indicators of ransomware and associated money laundering activities. In addition, in June 2021, FinCEN highlighted ransomware as a particularly acute cybercrime concern in its issuance of the first government-wide priorities for anti-money laundering and countering the financing of terrorism policy.

07/14/2021

Agencies propose risk management guidance for 3rd-party relationships

The federal bank regulatory agencies (Board of Governors, FDIC, and OCC) on Tuesday requested public comment on proposed guidance designed to help banking organizations manage risks associated with third-party relationships, including relationships with financial technology-focused entities. The proposed guidance is intended to assist banking organizations in identifying and addressing the risks associated with third-party relationships and responds to industry feedback requesting alignment among the agencies with respect to third-party risk management guidance.

Banking organizations that engage third parties to provide products or services or to perform other activities remain responsible for ensuring that such outsourced activities are conducted in a safe and sound manner and in compliance with all applicable laws and regulations, including consumer protection laws.

Comments must be received within 60 days of the proposed guidance's publication in the Federal Register.

07/13/2021

CFPB hits fintech GreenSky with $11.9M consent order

The CFPB announced Monday it had taken action against GreenSky LLC, a fintech non-bank institution in Atlanta, Georgia, for enabling contractors and other merchants to take out loans on behalf of thousands of consumers who did not request or authorize them. The CFPB issued a consent order against GreenSky requiring the company to refund or cancel up to $9 million in loans for customers harmed by its illegal conduct, pay a $2.5 million civil penalty, and implement new procedures to prevent future fraudulent loans.

GreenSky used merchants, primarily those providing home improvements, to promote and offer financing to customers before making on-the-spot lending decisions based on criteria provided by its partner banks. Proceeds from GreenSky’s loans, ranging from a few thousand to tens of thousands of dollars, bypass consumers and are disbursed directly to merchants following the merchants’ application for payment. Some consumers complained that they never applied for a loan or even heard of GreenSky before receiving billing statements, collection letters, and calls from the company.

The CFPB found that GreenSky engaged in unfair practices against their customers in violation of the Consumer Financial Protection Act of 2010 (CFPA). For additional details and a link to the CFPB's consent order, see "GreenSky pays $11.9 million for unauthorized consumer loans," in BankersOnline's Penalty pages.

07/07/2021

FDITECH opens tech sprint registration

The Federal Deposit Insurance Corporation (FDIC) yesterday opened the registration period to participate in a tech sprint designed to explore new technologies and techniques that would help expand the capabilities of banks to meet the needs of the unbanked. Interested organizations can request to participate in this Tech Sprint by visiting the FDIC’s Tech Lab (FDITECH) website.

FDITECH recently announced a first-of-its-kind tech sprint challenging participants to identify better resources and tools to help banks get the unbanked into the banking system and to sustain those banking relationships over time. Banks, non-profit organizations, academic institutions, private sector companies, and other organizations are invited to participate. Interested organizations may submit applications requesting participation by 5:00 p.m. ET on July 20, 2021.

07/01/2021

New booklet for FFIEC IT Exam Handbook

The Federal Financial Institutions Examination Council (FFIEC) on Wednesday issued a new booklet in the FFIEC Information Technology Examination Handbook series, titled “Architecture, Infrastructure, and Operations.”

The booklet provides expanded guidance to help financial institution examiners assess the risk profile and adequacy of an entity’s information technology architecture, infrastructure, and operations.

The new booklet replaces the “Operations” booklet issued in July 2004 and provides examiners with fundamental examination expectations regarding architecture and infrastructure planning, governance and risk management, and operations of regulated entities. The booklet discusses the interconnectedness among an entity’s assets, processes, and third-party service providers along with the principles, processes, potential threats, and examination procedures to help examiners assess whether a financial entity’s management adequately addresses risks and complies with applicable laws and regulations.

06/28/2021

FDIC FinTech online seminar

Tomorrow, from 1:00- 4:30 p.m. ET, the FDIC will hold an online seminar — Fintech: A Bridge to Economic Inclusion — Opportunities for Consumers and Small Businesses. Speakers include FDIC Chairman McWilliams and Chief Innovation Officer Sultan Meghji. Panel discussions will explore:

  • Enhancing inclusive consumer banking through fintech;
  • Deploying technology to improve credit access to small businesses; and
  • Exploring future opportunities for technology to drive inclusion.

Registration is available online TODAY, through 11:00 p.m. ET.

06/28/2021

FATF 4th virtual plenary concludes

The Treasury Department reported Friday that the Financial Action Task Force has concluded its fourth virtual plenary since the start of the ongoing COVID-19 pandemic. The FATF advanced its core work on virtual assets, proliferation finance, digital transformation, and peer member assessments. Actions include:

  • adoption of guidance on proliferation financing risk and mitigation
  • completion of a second 12-month review on AML/CTF obligations in the virtual assets sector
  • report on the financing of racially and ethnically motivated violent extremism
  • report on money laundering risks from conservation crimes
  • adoption of the mutual evaluation reports on Japan and South Africa

06/23/2021

ICO Issuer charged by SEC

The Securities and Exchange Commission has announced settled charges against Loci Inc. and its CEO John Wise for making materially false and misleading statements in connection with an unregistered offer and sale of digital asset securities in an Initial Coin Offering (ICO).

According to the SEC's order

  • Loci provided an intellectual property search service for inventors and others users through its software platform called InnVenn.
  • From August 2017 through January 2018, Loci and Wise raised $7.6 million from investors by offering and selling digital tokens called “LOCIcoin.”
  • In promoting the ICO, Loci and Wise made numerous materially false statements to investors and potential investors, including false statements concerning the company’s revenues, number of employees, and InnVenn’s user base.
  • Wise misused $38,163 in investor proceeds to pay his personal expenses.
  • Although LOCIcoins constituted securities, Loci’s offering was not registered with the SEC and no exemption from registration applied.

The SEC’s order imposes a $7.6 million civil penalty against Loci, and an officer and director bar as to Wise. Loci and Wise must destroy their remaining tokens, request the removal of the tokens from trading platforms, publish the SEC's order on Loci's social media channels, and refrain from participating in future digital asset securities offerings.

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